KIERAN GILBERT:
Let’s go live to the Treasurer, Jim Chalmers. Much anticipated number out today. The Budget said inflation, forecast inflation at 3.5 per cent for June – the June quarter. The RBA had it at 3.8 per cent. This is bang on what the RBA suggested. Do you still stand by the Treasury forecast of inflation being under 3 per cent by Christmas?
JIM CHALMERS:
Obviously, the Treasury will update the forecasts in the mid‑year update in the usual way they do that in each budget update. The Treasury forecasts round to the quarter per cent. They actually thought it’d be a little bit higher than 3 and a half. But you’re right that what we’re seeing today is consistent with the Reserve Bank’s forecast for headline inflation. But there are a couple of other important points in today’s data as well. Underlying inflation actually went down in our economy in quarterly and annual terms. The sixth consecutive quarter, it’s gone down. Monthly inflation went down. Non‑tradable homegrown inflation halved in the quarterly number. And the headline number, as you rightly say, is consistent with what the Reserve Bank expected. And so, inflation is still too persistent in our economy. It is more sticky and more stubborn than any of us would like. But underlying inflation continues to come down. And that’s an important development.
GILBERT:
When you look at that graph, and I know you know these numbers well, but it’s plateaued this year around that 4 per cent mark, inflation. And now you’ve got the tax cuts going out there, can you see why some economists are suggesting not only is it sticky and persistent, but the RBA does need to move again in terms of hiking rates?
CHALMERS:
First of all, that graph shows that when we came to office, inflation had a 6 in front of it, now it’s got a 3 in front of it. And as I said before, underlying inflation continues to moderate in the economy. In terms of our cost‑of‑living relief, a tax cut for every taxpayer is an important way that we are helping people deal with these cost‑of‑living pressures. And the reason it doesn’t put additional inflation into the system is because the envelope, the total spend on these tax cuts is about the same as the tax cuts that they replaced. But just as importantly, and we saw this in the ABS data today, our policies on energy bill relief, on cheaper early childhood education and on rent assistance are actually putting downward pressure on prices in our economy. And that’s not the opinion of the government. That’s the facts released today by the Australian Bureau of Stats. So whether it’s our 2 big surpluses, whether it is the responsible way we’re managing the economy or the design of our cost‑of‑living help, what the ABS has shown here, particularly in relation to cost‑of‑living help, is that we are helping, not hampering the fight against inflation. That’s one of the reasons why it’s come off so substantially since we were elected.
GILBERT:
Can you explain, so, you say that the government spending isn’t, and you’ve said this this morning to Peter Stefanovic and others and to me previously, that government spending isn’t one of the primary causes of price setting in our economy. The parallel to that, you’re making the point, and you did on Budget night as well, you said that the Budget will put downward pressure on inflation. So, can you explain how those 2 things sit side‑by‑side?
CHALMERS:
Of course I can. First of all, I’m saying that government spending is not the primary determinant of prices in our economy. Sometimes our political opponents will pretend that that’s the case. But it’s a $2.6 trillion economy, and we’re talking here about billions of dollars in cost‑of‑living help. That’s the first point. But the second point is, and we saw it in the numbers today, which I identified in my press conference, the ABS says electricity would have gone up 14.6, instead it went up 6. Remember, this is the cost‑of‑living help that our opponents didn’t want us to provide. Rent would have gone up 9.1, instead it went up 7.3. Early childhood education would have gone up 14.9 instead it fell by 5.7. And so, these are really good examples, not political opinions, but facts in the data which show that the cost‑of‑living relief that we’re rolling out, which our political opponents didn’t want us to do, is actually putting downward pressure on prices in our economy.
In the ABS’s estimation, we took about half a percentage point off inflation in the year to now, and in Treasury’s estimation will take another half a point off from the year from now. And that shows the impact that our policies can make. We’re helping, not hampering the fight against inflation. But government spending is not the primary determinant of prices in our economy.
GILBERT:
You say that you don’t want to give Governor Bullock any advice on doing her job, but I’ll read for our viewers who might not have seen it. But you said on your tweet today, ‘Today’s figures show that inflation is broadly in line with the RBA forecast. Underlying inflation is continuing to moderate, which tells us the general direction of price pressures is downwards’. You’re not telling the RBA what to do, but it’s a pretty good hint?
CHALMERS:
I think those are just the facts from the data today. And I’m serious when I say, I don’t want to give free advice to the independent Reserve Bank. I haven’t before now, and I’m not going to now and I won’t in the future either. There are good reasons not to do that. I take responsibility for my part of this. Two big surpluses which the RBA Governor has said is helping, and the design of our cost‑of‑living relief to take some of the edge off these cost‑of‑living pressures that we know that people are feeling. And those facts in the social media post that I put out a moment ago, those are just the facts laid bare in today’s release. Headline inflation is consistent with what the RBA thought it would be. Underlying inflation actually went down. Remember, our political opponents have said underlying inflation is what matters most that went down. They’ve also said that what matters is non‑tradable inflation, homegrown inflation that actually halved in the quarterly numbers. And so, these are important facts for people to understand. But we know that people are still under pressure and this inflation in our economy is more persistent than any of us would like. But within the data there are some welcome developments, even though inflation overall is still sticky and stubborn.
GILBERT:
And we can get that soft landing, do you think?
CHALMERS:
That’s the goal. We’ve got to get on top of this inflation challenge in our economy without smashing our economy or without smashing jobs. That’s part of my job and it’s part of the Reserve Bank Board’s job as well. And there are a series of judgments to be made, and I take responsibility for the judgments that we’ve made, the difficult decisions that Katy Gallagher and I and the Prime Minister and his Cabinet have taken to turn those big Liberal deficits into big Labor surpluses, and the decisions we’ve taken to provide cost‑of‑living relief in the most responsible way and in a way which the ABS has said today is effective when it comes to this fight against inflation.
GILBERT:
Thanks for your time. Probably a bit tired watching the Olympics as many of us are, a few legends from Logan as well, aren’t there, in the pool?
CHALMERS:
Mollie’s from Greenbank, we’re very proud of her in our part of south‑east Queensland. I was up late watching the Boomers, a tough loss to Canada, but still really excited about the Boomers prospects. Looking forward to the game against Greece.
GILBERT:
We’ll be cheering on the girl from Logan tomorrow morning thanks, we’ll talk to you soon.